Papers Link Japanese Companies to Payments in Philippines

By John BurgessBy John BurgessMarch 21, 1986

The Sumitomo Corp., Japan's fifth-largest trading company, today acknowledged reports that it had paid nearly $213,000 in commissions in the Philippines during the rule of deposed president Ferdinand Marcos but denied that the money was a bribe.

Other Japanese companies, which media reports here said were mentioned in documents seized from Marcos by U.S. authorities, denied knowledge of any improper payments. The Japanese government said it would investigate.

Toshihiko Morita, a Sumitomo Corp. director, said his firm had paid an agent $212,708.74 in 1979 as a 5 percent commission on a sale of power transmission wire and related material to the Philippine government. He said Sumitomo was trying to learn the agent's identity.

"This was a formal commission," Morita said in a statement. "It was not a bribe." Sumitomo, with worldwide sales annually of about $75 billion, did about $180 million in business with the Philippines in the year ending November 1985.

The statement came after the Japanese press reported, based on an article in The New York Times, that documents taken from Marcos showed that the Marcoses apparently received a $212,708.75 payment from Sumitomo.

Reports of possible improprieties by Japanese firms in the Philippines are leading newspapers and television news broadcasts. They are based on leaked accounts of documents taken from Marcos and his entourage after they arrived in Honolulu from Manila last month.

The reports seem certain to reopen a debate here about Japanese companies' conduct overseas. Critics contend that commissions paid to agents are in fact often bribes that were passed on to government officials. Defenders of the system say they are legitimate fees for services rendered in a chaotic and corrupt economic environment.

Payment of such fees by U.S. companies are regulated by the Foreign Corrupt Practices Act. Japan has no comparable laws, although officials here have said that payments could violate Japanese foreign-exchange laws.

Japan has prided itself on its economic aid program to the Philippines, which has channeled $1.3 billion in grants and $2.7 billion in loans since 1956. In many recent years, it has surpassed the U.S. program in annual outlays.

However, since the departure of Marcos, concerns have mounted here that much of the money may have been diverted to him and his close associates and relatives. Foreign Ministry officials disclosed today that a four-member committee will meet Monday to begin studying possible abuse of the program.

The Marubeni Corp., Japan's fourth-largest trading company and the dominant figure in Japanese commerce with the Philippines, declined comment on reports by Japan's Kyodo News Service that it was named in the documents.

A company spokesman said that Marubeni pays agent commissions on a case-by-case basis overseas. He declined to talk about whether they were paid in the Philippines.

Marubeni publicly courted Marcos and handled about $500 million of the annual $2.2 billion two-way trade between the countries. It has equity investments in 11 companies in the Philippines, many of which were run by close Marcos associates, and is owed about $580 million by Philippine debtors.

A spokesman for Kanematsu-Gosho Ltd., a trading company named by The New York Times as mentioned in the documents, said its annual trade with the Philippines was $24 million and declining. "We checked inside the company, but there's no record that we paid money to Mr. Marcos," he said.

Kajima Construction Co., which the Japanese newspaper Mainichi Shimbun reported was named in the documents, said it had had only one project in the Philippines during the last five or six years, construction of a navigation training center.

Foreign Minister Shintaro Abe, answering questions today in the Diet, or parliament, said that "if a Japanese company's name has been mentioned, the government will have to be concerned. We would like to ask the U.S. government to provide the information."